The Global Minotaur
| Author | Yanis Varoufakis |
|---|---|
| Country | England |
| Language | English |
| Subject | Economics |
| Genre | Non-fiction |
| Published | 2011 Zed Books |
| Media type | Print, e-book |
| ISBN |
The Global Minotaur: America, Europe and the Future of the Global Economy is a book by economist and former Minister of Finance for Greece Yanis Varoufakis, first published in 2011 by Zed Books. A third edition was released in July of 2015 with the updated subtitle America, the True Causes of the Financial Crisis and the Future of the World Economy.
The book seeks to explain the origins of 2008 financial crash through an analogy of the story of the Minotaur from Greek mythology. Specifically he argues that since the 1970s the United States have played the role of a Global Minotaur, consuming surplus capital from the rest of the global economy, and maintaining global economic stability in the process. He argues the 2008 crash can be understood as resulting from a potentially fatal wound inflicted on the Minotaur by the collapse of the banking system.
Varoufakis begins his analysis with the Great Crash of 1929 and the Great Depression that followed as a result. He argues that Franklin D. Roosevelt's New Deal was not enough to bring America out of recession, and that it wasn't until the Second World War and the massive public spending program it brought about that the USA finally recovered.
Once the war began to recede US planners became concerned that recession would once again take hold, and to address this in 1944 they organised the Bretton Woods Conference, a gathering of global leaders that was to determine the design of the post-war global economy. While John Maynard Keynes, negotiating on behalf of Great Britain, proposed an International Currency Union with incentives for balancing global trade this was rejected by the US in favour of what Varoufakis calls the 'Global Plan'.
The USA came out of the Second World War as the world's major power with twin trade and budget surpluses, and so rejected Keynes' proposal in favour of an alternative plan that would preserve its hegemony. The Global Plan involved the creation of a system of fixed exchange rates with the US dollar pegged to gold at a fixed exchange rate of $35 an ounce. The plan also involved the rebuilding of the German and Japanese economies, devastated by the war. Early example were the Marshall Plan in Europe and later the Korean War for Japan. Crucially the plan also featured a 'Global Surplus Recycling Mechanism', that would recycle American surpluses to the rest of the world economy, thus preserving global stability by avoiding unstable trade imbalances.
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